The Gannon School finance decision landed on the mid-term break while legislators were back home.

As most people expected, the decision went against the state and the Kansas Legislature is once again being called upon to step up to the plate and provide adequate financing for the educational interests of the state.

Our past experience shows us that the first week or so after such a decision is dedicated to complaining, attacking the justices, and trying to convince the voters that the state should never have lost. But our past experience appears not to be playing out as the reality of 2017.

Legislators have returned to work and, while today was a rather slow day, there was very little talk about the challenges of complying with the court.

Some – like Governor Brownback and Rep. John Whitmer – have decided that since the decision used the achievement gap as part of the justification, the solution is to drain more money out of the public school system and send it to private and religious academies. But more legislators are taking a different tack and calling for a rolling up of sleeves and getting down to work.

That was certainly the air in the House K-12 Education Budget Committee which had a meeting to discuss at-risk funding and how to best meet the needs of challenging students in the new formula. Chairman Larry Campbell (R-Olathe) seems determined to get to work at putting together the new formula as soon as possible. They’ve already had hearings on several new formula ideas and have examined all aspects of funding and student need. We expect this committee to get to work assembling a plan very soon.

But there are at least two other issues to solve before we are out of the session.

The first is what to do about revenue. Kansas is facing a nearly $300 million shortfall for the rest of this fiscal year and a shortfall of some $500 million or more in the next fiscal year. And these figures don’t account for any increase in school funding in response to the court decision. The Governor vetoed the first bill to try to responsibly deal with revenue in the out years (HB 2178) and while the House voted to override his veto the same effort in the Senate came up three votes short.

The Senate has since crafted another bill very similar to HB 2178 but not applied retroactively. Unfortunately this bill slashes the revenue produced by about $100 million so it will not solve the problem going forward.

What the Legislature simply must do now – and soon – is craft a tax bill that raises sufficient revenue to both close the current hole in the next fiscal year and provide for an increase in school funding to satisfy the Court. However they do this, three things are musts – they must repeal the “glide path to zero” formula that would end income taxes entirely, they must repeal the LLC loophole that allows 330,000 Kansas business owners to pay no income tax at all, and they must add at least one more income tax bracket at higher income levels so that all are paying their fair share. Sadly, Brownback seems determined to stick with his failed tax system and so both chambers need to be ready to override his veto.

The next challenge is how to fund the rest of this fiscal year. Again, the House is leading the way by passing a bill to liquidate the pooled money investment portfolio. While this action would create a repayment obligation for several years, it would generate enough money to get Kansas out of the current shortfall without having to make additional cuts to services. The repayment obligation can be taken into consideration in putting together the new tax plan. This bill (HB 2161) is now in Senate hands.

The challenges are tremendous but they are not insurmountable. The House has already shown a willingness to get the job done; a majority in the Senate has as well. But we need to work to get the super-majorities necessary for veto override votes if we really want to come out of mess created by Brownback and his allies in 2012-13. The voters did a lot of the heavy lifting in August and November when they ousted so many of those who supported Brownback and replaced them with common sense moderate Republicans and Democrats. Now we just need to be there to help these new folks get the job done.

As this session moves forward, we urge you to be faithful readers and stay ready to take action. We depend on you to help persuade your legislators to get on board.

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House Stands Up for Kansas, Overrides Tax Veto

The excitement under the dome this morning was a motion to override the Governor’s veto of HB 2178, the tax reform bill that ends Brownback’s disastrous tax policies first enacted in 2012. The bill represents the first effort to reverse course and restore stability and prosperity to Kansas.

We are exceedingly proud of the strong bipartisan majority who worked to first create the bill and then to override the veto.

16 Senators Fail Kansans

Sadly, the Senate had other ideas. Senate leadership (President Susan Wagle and Majority Leader Jim Denning) joined the Brownback allies in blocking the override of the Governor’s veto of HB 2178. Their refusal to join their House colleagues in overriding the veto means that we are back to square one where the majority of legislators try to pass responsible tax reform, the Governor vetoes it while clinging to his delusional confidence in a plan that has done nothing but bankrupt the state.

Brownback will veto any bill that challenges his delusion. His plan is to rob KPERS and Highways and early childhood education programs; his plan is to do nothing and continue in the belief that some magic will occur to save him. And sadly his allies continue to give him anything he wants.

Until the Senate stands up to Brownback, there is little hope that Kansas can get back on the track to stability and prosperity.

House Passes Due Process Restoration; Sends it to the Senate

The House this morning to approve HB 2186, the arbitration bill that includes the Stogsdill amendment restoring due process for Kansas teachers. The amendment inserted the contents of HB 2179 into HB 2186. The bill passed on a vote of 72-53. The vote is as follows:

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House Tax Bill Comes Out of Committee

The Senate on Thursday abandoned debate on their tax bill when it was clear that it would not get the votes necessary to pass. That bill, SB 147, would have raised about $280 million by raising income taxes on all Kansans. While it repealed the LLC tax loophole, it did not end the Brownback glide path to zero. The money raised in the bill would have resulted in the need to once again raise taxes later this year or immediately in 2018 and the continuation of the glide path would have put Kansas in the same budget crisis in the future.

Also on Thursday, moderate Republican and Democratic Senators handed leadership yet another defeat when they announced that they would not vote for SB 27, the cuts bill that would have reduced education funding by $154 million dollars in the current year.

Senate president Susan Wagle has been insisting that cuts were needed and that support for increased taxes must be concurrent with budget cuts the largest of which would be applied to K-12 public schools.

Over in the House, they are taking a radically different approach. Late yesterday the House Taxation Committee assembled and passed a comprehensive tax restructuring bill that goes a long way to restoring stability to the state’s revenue system.

Under the House plan, House Substitute for HB 2178, the glide path to zero income tax would be repealed as would the LLC loophole. The loophole would be repealed retroactively to all of 2017.

The House would restore the third income tax bracket set at 5.45% for those with an adjusted gross income of $50,000 or more filing as an individual and $100,000 for married couples filing jointly.

Income rates under the House plan for those married filing jointly would change as follows:

Taxable income (AGI)

1992-2012

Current law (2017)

Sub for HB 2178 (2018)

$0-$30,000

3.5%

2.7%

2.7%

$30,001-$60,000

6.25%

4.6%

5.25%

$60,001-$100,000

6.25%

4.6%

5.25%

$100,0001 +

6.45%

4.6%

5.45%

The full deduction for medical expenses which was repealed in 2013 would be restored effective 2017.

This tax bill is estimated to raise an additional $590.2 million in fiscal year 2018.

The bill is a major step forward in the debate over tax policy under the dome.

Next week, the House Appropriations Committee will hold a hearing on HB 2161, a bill that would liquidate the pooled money investment portfolio putting about $317 million in the treasury. The portfolio would then be paid back at about $45 million per year for seven years. This action would likely create enough one-time money to plug the hole in the current year budget. It would, however create a seven year obligation. KNEA believes that this is the best way to get out of 2017 without cutting state services but must be done in conjunction with a comprehensive tax fix that provides for state services and allows the new obligation to be paid.